The legislation pertains to the taxation of both cryptocurrency holdings and transactions by classifying cryptocurrencies as property for tax purposes, not currency. This means that crypto income, such as profit from mining, staking, or rewards, is subject to income taxes, and you will owe taxes according to your income tax bracket. 

Because cryptocurrency transactions do not trigger automatic taxation at the time of receipt, you must report any crypto income when you file your taxes. With any transactions when you sell or exchange your crypto for cash, you owe capital gains taxes. The amount owed depends upon the difference between the sale price and the “cost basis,” or what you paid for the crypto (or fair market value when you received it). 

If the crypto is sold after being held for greater than a year, it is a long-term gain, and because of that is taxed at a lower rate (0%, 15%, or 20% at the federal level based on your income) than if it were a short-term gain (held for less than a year). 

Short-term gains are taxed as ordinary income tax rates. Capital losses (i.e. loss from selling crypto for less than the purchase price) will offset capital gains from other assets and will lower your tax liability. Up to $3,000 losses will also offset your ordinary income with leftover losses carried over into the following year.